Electronic Library of Scientific Literature


Volume 44 / No. 2 / 1996



Basic information about the economic development of Slovakia within the independent Slovak Republic is illustrated in Table 1 (p. 83).
The economic recovery which continued in 1995 from 1994 developments was reflected in the production-output and monetary figures. Adopting a reasonable anti-inflation monetary and fiscal policy has added greatly to a sound market balance both internally and externally within a generally favourable, even improving framework. Activities of majority of enterprises which have already been adapted to the market economy conditions took the opportunity of the strengthening market balance for improving the balance between capacities and their better utilization in performance and (in 1995) in employment as well.
Current figures showing the economic recovery allow for positive evaluation, however, prudence is required due to the following reasons.
First, the development from the transformation recession to the recovery during 1994 and 1995 brought about surprisingly good results, but the performance of the economy still lags behind the pre-reform level.
Second, there is no certainty that the positive turn in the economic recovery trend will last long or that the growth supports sufficiently a smooth development and that it is strong enough to overcome the risks of its own future development.
Acceleration of economic growth in 1995 in comparison to 1994 was achieved mainly due to the fact that a rise in exports and its income effects started to contribute to a much more favourable development of the major components of domestic demand, i.e. in the growing households' consumption and gross capital formation. However, the favourable development in domestic demand in 1995 was but partly autonomous within the small and rather open Slovak economy. In greater part it was induced by the growth in external demand. On basis of this, it is assumed that within the impact of demand factors on GDP development, the external demand trends of the impact performed on global demand through the export and imports sides of foreign trade, will prevail also in 1996. In particular, due to the worsened boom in EU countries during 1996, but also due to inflation joined with devaluation of the Slovak crown, even without any further impact (e.g. without potential weakening of anti-import measures) it can be assumed further slowdown in export growth and faster import growth. In 1996, these trends in foreign trade development will slowdown the rate of Slovak economy performance.
The rate of economic growth (GDP growth) envisaged for 1996 together with prognosis of other indicators of economic development are illustrated in Table 2 (p. 113).



Foreign trade of the SR, particularly after division of Czechoslovakia by January 1, 1993, represent a very important factor of the economic growth. Exports in 1994 achieved up to 51 % (in 1995 even 49.7 %) of GDP, with imports taking roughly the same share of GDP. This relatively great openness of the Slovak economy results to very sensitive reaction of the economy to all deviations in foreign trade, and through foreign trade it reacts equally sensitively to the world trade development and to the world economy as a whole.
At the same time the foreign trade is also an important tool and a form of international division of labour, and of integration processes. In this context the foreign trade is a certain reflection of the economy structure in general and its ability to penetrate itself into the world economy. Foreign trade is, on the other side, a certain carrier of transmission of impulses from the world economy for internal structural adaptation of economy and its effective re-incorporation into the international division of labour.
Just the process of structural adaptation, seen at the background of overall dynamics and commodity and territorial foreign trade structure represents for effective entry of the Slovak economy into integration process one of key problems of the further positive economic development of Slovakia. No matter how important overall development trends of the Slovak foreign trade are, from the point of view of integration processes and creation a new profile of international division of labour the problem of Slovak foreign trade relations development is temporarily focussed first of all at the European Union.
Slovak Republic has signed the European agreement upon the association and gradual creation of the free trade zone. It seems, that above all smaller economic developed countries of the EU might be serve as a certain criterion for the evaluation of Slovakia chances to become an integrating partner of the European Union, either from the overall economic level point of view, or from the view point of structural parameters of economy.
Thus we assume, that in the small economies, such as the Slovak economy is, it is correct and necessary to recognize the importance of foreign trade relations, and to study them at two levels listed already. It is important to deal with foreign trade relations not only from the point of view of sensibility of the economy to the external demand, but also from the point of view of active ambition to become an effective and profitable partner for international cooperation development with the effect of economies of scale and competitiveness growth within the whole integrated space. That is conditioned by acceptance of inescapability of structural adaptation of Slovak economy aiming at the competitiveness increase on the basic of structural approximation to small west economies too.



This article concentrates on the key problems of managing state's debt in the Slovak Republic. It is derived from the theoretical and methodological study prepared for research project ACE-PHARE concerning questions of state's debt in the epoch of transformation of the economy. Consequently it takes into account specific conditions present in the Slovak Republic.
On the basis of the analysis pertaining to the development of indebtedness of the Slovak Republic, from the beginning of its existence and in comparison with other countries of CEFTA, the study claims that the internal and external debt in the Slovak Republic has not reached critical level. This came about mainly from the relatively positive situation which was created by the division of state debt's obligations of the former Czech and Slovak Federated Republic, as well as obligations toward certain countries of former Council for Mutual Economic Assistance. Hence, the burden of management and the development of state's debt does not consist in the management ex post, i.e., straightening of formerly acquired obligations, but in maintaining the initial position during the renewal and further development of the economy. Thus the fundamental problem is the management of the long-term development ex ante, which essentially means to include in the debt policy stability and maintenance of existing debt position. The goal here is to secure the stability of the economy, namely, the renewal of economic growth by maintaining the original long-term state of indebtedness (relationship between the balance of payment deficit and Gross Domestic Product) and an optimum increase of expenditures of service debt from the perspective of the increase of balance of payments and the increase of income of the state budget.
In the long-term strategy, this will amount mainly to gradual lowering of the amount of debt with the increase of GDP. Along with this, the key question pertaining to the management of debt policy consists in securing ongoing solvency of the state in regard to international and domestic economy. in the article are formulated in greater detail various approaches toward the management of state debt ex ante, the determinants of solvency of the state within the realm of debt policy, as well as the instruments and the care of economic policy given to the rational management of state debt. In spite of the fact that the development of the state debt in the Slovak Republic takes place in specific situation, the mentioned solutions create opportunities also for more general conclusions of debt strategy ex ante in the conditions of the transformation.



This study represents the first relatively consistent attempt to draw possible scenarios of the Slovak economy until the year 2005 and to formulate and quantity a preconditions for reaching them. The economic growth scenarios use the following average annual GDP increase (in rough values): 3 per cent, 6 per cent and 9 per cent. To re-counting of these forecast scenarios we have used experimental econometric model developed especially for this purpose.
Of course, in current significant changes in development of the Slovak economy each model for practical use in quantifying of its long term development must contain several simplification and ex-ante preconditions, which must be gradually clarified. This is the reason why the result presented in the study must be considered as the first approximation of given goals.
A long-term forecast must be based, on the one hand, on analysis of the current states of an economy and its developments tendencies and, on the other hand, on a given strategic goals, having in mind real conditions for reading the goals. Current state and development of the Slovak Republic had been analyzed in another studies.
Based on given information, it is evident that in the case of 3 per cent GDP growth rate in Slovakia (i.e. GDP per capita growth by roughly 2.8 per cent) such growth rate would not be able, for decades, to guarantee push Slovakia ahead, to catch up on the less developed EU states group. But in the case of GDP's 6 per cent growth rate approximately in the year 2005 an average of Greece and Portugal could be reached and, at the same time, Slovakia would reach roughly 57 per cent of the EU average level (in comparison with current 40 per cent of that level). A GDP growth about 9 per cent would lead to reaching these results in the year 2000 which would give a better chances for Slovakia to be EU member at the very beginning of the 21st millenium.